Qwest ups ante in merger offer to MCI

The announcement that Verizon and MCI had entered into a merger agreement hasn't slowed down Qwest's bid to break up the deal. Verizon's accepted offer to MCI included US$4.8 billion in equity and $488 million in cash; the latest revised merger offer from Qwest totals US$8.45 billion. The offer breaks down to US$10.50 in cash and 3.735 Qwest shares per MCI share.

MCI announced that it will review Qwest's offer and will issue a response from the company's Board of Directors by close of business on March 28, 2005. Yesterday was the last day MCI had set to engage with Qwest regarding any merger offer.

Verizon will have 5 days to match Qwest's offer should it be accepted by the Board. If Verizon decides not to match it it will walk away from the merger deal with $200 million from a break-up fee.

BRIAN'S OPINION
Verizon and MCI seem to want to close the bar, but Qwest won't go home.

On the surface it seems that, monetarily at least, Qwest's offer is superior. The thing to keep in mind is that at the end of the day any of Qwest's debts as a part of the deal will become MCI's debts since the two will become one company. That being said, simply writing a bigger check may not be best for MCI in the long run. Investors may disagree, though.

Watching takeovers in the telecommunications industry is almost becoming a sport. The AT&T Wireless and Cingular (see our coverage), Nextel and Sprint (see our coverage), and SBC and AT&T (see our coverage) mergers wouldn't have been thought of a few years ago. Even less would there be a notion that all of these mergers would happen in such a short timeframe. MCI will soon be added to the list. The only drama now is if it will end up with Verizon or its new suitor.

Let'm have it(3:42pm EST Fri Mar 18 2005)Verizon should let Qwest have MCI. Then when the combined company goes broke (which they are both good at), buy them for pennies on the dollar. – by thinkBig

TAKE IT!!(5:38am EST Sat Mar 19 2005)Please, god, someone friggin take this stupid company I work for! Qwest I've never heard of…sorry…I kept the company memo that announced the merger between MCI and Verizon….hilarious…. – by MCISlave

2-fer(4:59pm EST Mon Mar 21 2005)As a Verizon employee, I'm in agreement with thinkBig. Why buy one today when we can wait and get two tomorrow for basically the same price? – by VZGeek